1 / 34

Corporate Digest Magazine- October/2017

October-2017 magazine has covered complete focusing on finance & strategy with special story as “Risk & Entrepreneurship”.

MayuriJain
Download Presentation

Corporate Digest Magazine- October/2017

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. October 2017 INR 150/- Risks and Entrepreneurship - (Special Story) Venture Care D i g e s t Strategy | Finance | Digital | Legal www.venture-care.com Financial Modelling- A prac?cal view Things to considered while dra?ing a business plan Star?ng a NIDHI COMPANY in India - ( Legal & Compliance ) - (Finance) - ( Strategy )

  2. Index Index 3 Editorial Special Story Risks and Entrepreneurship 4 Legal & Compliance Star?ng a NIDHI COMPANY in India 8 Strategy Strategies: Root of business Tested Ways Grow Your Business Things to considered while dra?ing a business plan 18 20 24 27 29 Momentum = Mass X Velocity Road Map to dra? a Business plan Finance Financial Modelling- A prac?cal view 32 2 www.Venture-Care.com/Magazine October 2017

  3. Editorial Prashant Kumar Prashant Kumar Editor This October issue is focusing on finance & strategy with special story as “Risk & Entrepreneurship”. Strategies are important and are root of any business. Strategies can not be avoided. You will find that how strategies are important in this digest. Nidhi Company means a company which has been incorporated as a public company with the object of-Cul?va?ng the habit of thri?y and savings amongst its members and receiving deposits from, and lending to, its members only, for their mutual benefit. Objec?ve of nidhi company is to simulate savings among its member and to lend Loans and receive money as deposits for the purpose from only its members. It is very good idea that has been carried out by RBI. You will find all the related aspects of a nidhi company. Businesses get started. Promoters expect to grow the business. You will find that what are the ways to grow the business. Business plan is so important that any promoter would like to have to have a sound business plan. There are other special theams in this issue which I hope that you will enjoy reading. Happy Reading... 3 www.Venture-Care.com/Magazine October 2017

  4. Special Story Risks and Entrepreneurship Risks and entrepreneurship go hand in hand. No business owner should just believe it and be passive. Of course risks should be mi?gated or at least be reduced. Let me clarify that risk is not always bad for business and its owner. Entrepreneurs should take calculated risk. First of all let us discuss what the benefits are of risks in the business: It refines vision and mission of the company It makes the organiza?on more proac?ve in handling any kind of situa?on It makes decision makers more aggressive It helps in devising flexible strategies for the organiza?on It sends posi?ve energy to the middle and junior level management It helps organiza?ons in reaching new height of growth It helps in forming much more loyal and dedicated team for execu?on 4 www.Venture-Care.com/Magazine October 2017

  5. Special Story However, it is injus?ce to say that there are no cons of risks: Frequent failure of strategies may dishearten the top management Compe?tors may acquire the failed organiza?on Execu?on team may leave the organiza?on Sense of fear may develop across the organiza?on Future contracts may be cancelled There may be socio-economic pressure from stakeholders including government It is general no?on that a start-up always faces higher degree of risk.But, this in not completely true. A bigger organiza?on will always face higher degree of risks because of large size, huge finance obliga?on, bigger team, global opera?on etc. Shi?ing from one strategy to another to reduce risk is ?me taking and by the ?me it takes alterna?ve course of ac?on, a?ermath of risk becomes severe and unmanageable. In contrast, smaller organiza?ons including start-ups can shi? to alterna?ve strategic plans soon to mi?gate or reduce risk. Let us discuss that what kind of general risks an organiza?on may face: Management risk- any of the key persons leaving the organiza?on Product risk- failure of product because of being out-dated or compe?tors came up with much advanced product or associated services Team risk- execu?on team leaving the running projects suddenly Suppliers' risk- vendors/suppliers cancelling the contracts at very short no?ce Legal risk- companies falling into li?ga?ons with compe?tors Environmental risk- sudden development of rules and regula?ons by state or central government pu?ng pressure hard to survive Financial risk- inability to service to debt or not mee?ng financial expecta?ons of outside equity providers 5 www.Venture-Care.com/Magazine October 2017

  6. Special Story General approach for mi?ga?ng or reducing the impact of risks: Try to forecast the risk- although it is difficult in changing business environment but to some extent it is possible as well as desirable. Do not ignore ifs and buts- always have back up plan; be it related to product/services modifica?on, new launch, execu?on team etc. Communicate well inside and outside the organiza?on- miscommunica?on will create risk Maintain rela?onship- develop and maintain rela?onships with current customers/vendors and also with past vendors. Raise finance only to the extent of requirements and stage-wise Focus on cu?ng down the opera?onal and other cost Develop new way of marke?ng KEY TAKE AWAYS, risk is a double-edged sword. Taking risk is good but mi?ga?ng the impact of unwanted risk is desirable. Understand your business and business dynamics very well and deeply. Do counter a?ack if possible and required. 6 www.Venture-Care.com/Magazine October 2017

  7. Biggest Startup Events Throughout Pan INDIA A Step Towards A Step Towards Building a Smart Eco-system for Building a Smart Eco-system for Building a Smart Eco-system for #Startup India A Step Towards Learn An Initiative to Raise of Entrepreneurship among Graduate and Equip to launch their Startup Business. Get Inspired at any of our seminar and learn entrepreneurship. with on board Mentors. Plan Your 1st Startup to launch your startup. Be Resourced Learn more at : Write to us : www.venture-care.com/entrepreneur-funnel initiative@venture-care.com 020 65363633

  8. Legal & Compliance Starting a Nidhi Company in India Nidhi Companies is regulated by Sec?on 406 of Companies Act 2013 and Companies (Nidhi Companies) Rules, 2014 MEANING: Nidhi Company means a company which has been incorporated as a public company with the object of-Cul?va?ng the habit of thri? and savings amongst its members and receiving deposits from, and lending to, its members only, for their mutual benefit. OBJECT TO INCORPORATE NIDHI COMPANY: Nidhi Company is incorporated with following objec?ves: To s?mulate savings among its member To lend Loans and receive money as deposits for the purpose from only its members. Since Nidhis come under NBFCs, the RBI is empowered to issue direc?ons to them in ma?ers rela?ng to their deposit acceptance ac?vi?es. However, since Nidhis deal with their shareholder- members only, RBI has exempted such no?fied firms from the provisions of the RBI Act and other direc?ons applicable to NBFCs. 8 www.Venture-Care.com/Magazine October 2017

  9. Legal & Compliance APPLICABILITY: The Central Government made 'Nidhi Rules, 2014' for the purpose of carrying out the objec?ves of 'Nidhi' companies. These rules shall be applicable to- Every company which had been declared as a Nidhi or Mutual Benefits under Sec?on 620A(1)of Companies Act, 1956; Every company func?oning on the lines of a Nidhi company or Mutual benefit society but has either not applied for or has applied for and is awai?ng no?fica?on to be a Nidhi or Mutual Benefit Society under Sec?on 620A(1)of Companies Act, 1956; Every company incorporated as a Nidhi pursuant to the provisions of Sec?on 406of the Companies Act, 2013. PRE-REGISTRATION REQUIREMENTS FOR REGISTERING A NIDHI COMPANY : Minimum Three Directors: Minimum three Directors are required to incorporate Nidhi Company. All this three director has to act as members of the company. Minimum Seven Members: Nidhi Company can be started with seven members. Out of which 3 are also to be appointed as directors. Minimum Capital Requirement: Nidhi Company as Public Limited Company Should have Capital of Rs.5,00,000/- Like Public Limited Company. No Preference Shares shall be issued. Object of the Company The objec?ve of such a firm would be to imbibe in the members a habit of thri? and saving and the services would only be restricted to its members;. The name of the company must have word as Nidhi Limited at the end. PROCEDURE FOR INCORPORATION OF NIDHI COMPANY : Get Digital Signature Cer?ficate (DSC) of all seven members. Get Director Iden?fica?on number (DIN) of three Directors by using DSC. Suggest at least Six Company name. We will do search for name availability. Apply to ROC for name approval with adding word Nidhi Limited. Once name is approved by ROC File Incorpora?on document with ROC like MOA AOA Consent of Director, Affidavit and declara?on from directors etc. Once Incorpora?on form is approved by ROC, ROC shall issue Cer?ficate of Incorpora?on with PAN and TAN No. 9 www.Venture-Care.com/Magazine October 2017

  10. Legal & Compliance Requirement to Apply for DSC: All 7 members should have DSC Pan Card Self A?ested Residen?al Proof Self A?ested Dully fill and sign DSC applica?on form. Requirement to Apply for DIN: (Minimum Three Directors are required for Incorpora?on of Nidhi Company) Photograph of the Applicant - To be Self-a?ested. PA N - To be Self-a?ested Mobile No. Email id. Educa?onal Qualifica?on Occupa?on Proof of residence of applicant Address proofs like passport, elec?on (voter iden?ty) card, ra?on card, driving licence, electricity bill, telephone bill or bank account statement shall be a?ached and should be in the name of applicant ( shall not be later than 2 months). DSC of Individual. 10 www.Venture-Care.com/Magazine October 2017

  11. Legal & Compliance Requirement to Apply for Name Availability: Six Proposed name with significance of Name Authorized Capital- Minimum 5 Lacs Jurisdic?on of Registrar of Companies. Main Object to be pursued by Company Requirement to Apply for Incorpora?on of Nidhi Company: Registered office address of Company. Recent Address proof with NOC from Owner. Consent from all Directors Affidavit and declara?on from all directors and subscribers. TIME PERIOD: Time Required for Incorpora?on of Nidhi Company Shall be 20-30 days, depending on government approval. 11 www.Venture-Care.com/Magazine October 2017

  12. Legal & Compliance POST-REGISTRATION REQUIREMENTS FOR A NIDHI COMPANY : There are certain Compliances which Nidhi Company has to do a?er incorpora?on of Nidhi Company. Every Nidhi Company shall, within a period of one year from Incorpora?on of the company, ensure that it has Not Less than 200 Members: A?er incorpora?on, a Nidhi company must add at least 200 members to comply with this requirement of law. Further, it has to maintain this during the course of ?me. If the total members falls less than 200 at any ?me therea?er, it will leave the company at default. However, if the company is not able to reach the limit of 200 members, then you must apply for ?me within 30 days of closure of financial year in Form NDH-2 with Regional Director. Net Owned Fund: Net owned funds shall be Rs.10,00,000/- or more ('Net owned funds' means the aggregate of paid up equity share capital and free reserved as reduced by the accumulated and intangible assets appearing in the last audited balance sheet). Ra?o: Ra?o of net owned funds to deposit shall be not more than 1:20. This ra?o is very easy to understand. Suppose, if you have net owned funds of 10 lakh, then your total deposit limit would be INR 2 Crore. Deposit: Unencumbered term deposits of not less than 10% of the outstanding deposits as specified in Rule 14. Members restric?on: A Nidhi Company shall not admit a body corporate or trust as a member. A minor shall not be admi?ed as a member of Nidhi Company. But deposits may be accepted in the name of a minor, if they are made by the natural or legal guardian who is a member of Nidhi GENERAL RESTRICTIONS: Rule 6 provides general restric?ons. According to this Rule no Nidhi shall- Carry on the business of Chit Fund, Hire Purchase Finance, Leasing Finance, Insurance or Acquisi?on of Securi?es issued by anybody corporate; 12 www.Venture-Care.com/Magazine October 2017

  13. Legal & Compliance Issue Preference Shares, Debentures or Any Other Debt Instrument by any name or in any form whatsoever; Open any Current Account with its members; Acquire another company by; Purchase of securi?es or Control the composi?on of the Board of Directors of any other company in any manner whatsoever or Enter into any arrangement for the change of its management, unless it has passed a special resolu?on in its general mee?ng and also obtained the previous approval of the Regional Director having jurisdic?on over Nidhi; Carry on any business other than the business of borrowing or lending in its own name; Accept Deposits from or lend to any person, other than its members; Pledge any of the assets lodged by its members as security; Take Deposits from or lend money to anybody corporate; Enter into any Partnership Arrangement in its borrowing or lending ac?vi?es; Issue or cause to be issued any adver?sement in any form for solici?ng deposit; Pay any brokerage or incen?ve for mobilizing deposits from members or for deployment of funds or the gran?ng loans. Share capital allotment: Every Nidhi shall allot To each deposit holder at least a minimum of 10 equity shares or shares equivalent to Rs.100/-. To each savings account holder and a recurring deposit account holder at least 10 equity shares of Rs.10/-. 13 www.Venture-Care.com/Magazine October 2017

  14. Legal & Compliance Acceptance of deposits: A Nidhi shall not accept deposits exceeding 20 ?mes of its Net Owned Assets as per last audited financial statements. The fixed deposits shall be accepted for a minimum period of 6 months and a maximum period of 60 months. Recurring deposits shall be accepted for a minimum period of 12 months and a maximum period of 60 months. In case of recurring deposits rela?ng to mortgage loans, the maximum period of recurring deposits shall correspond to the repayment period of such loans granted by Nidhi. The maximum balance in a savings deposit account at any given ?me qualifying for interest shall not exceed Rs.1,00,000/- and the interest shall not exceed 2% above the rate of interest payable to savings bank account by na?onalized banks. Interest for fixed and recurring deposits shall be at a rate not exceeding the maximum rate of interest prescribed by RBI which the NBFC can pay on their public deposits. Every Nidhi shall invest and con?nue to keep invested, in unencumbered term deposits with a scheduled commercial bank or post office deposits in its own name an amount which shall not be less than 10% of the deposits outstanding at the close of the business on the last working day of the second preceding month. In case of unforeseen commitments, temporary withdrawal may be permi?ed with the prior approval of the Regional Director for the purpose of repayment to depositors, subject to such condi?ons and ?me limit which may be specified by the Regional Director to ensure restora?on of the prescribed limit of 10% Loan: A Nidhi shall provide loans only to its members. The loans given to a member shall be subject to the following limits: Rs.2,00,000/- where the total amount of deposits from members is less than Rs.2 crores; Rs.7,50,000/- where the total amount of deposits from its members more than Rs.2 crores but less than Rs.20 crores; Rs.12,00,000/- where the total amount of deposits from its members is more than Rs.25 crores but less than Rs.50 crores; Rs.15,00,000/- where the total amount of deposits from its members is more than Rs.50 crores. NOTE: A Nidhi shall give loans to its members only against the following securi?es, namely: Loans to the members shall be given against the securi?es of gold, silver and jewellery and immovable property. Repayment period of such loan shall not exceed one year in case of gold, silver and jewellery. In case of immovable property the loan shall not exceed 50% of the value of the property offered as security and the period of repayment of such loan shall not exceed 7 years. Loan may be given against the fixed deposit receipts, Na?onal Savings Cer?ficates and other Government securi?es and insurance policies. 14 www.Venture-Care.com/Magazine October 2017

  15. Legal & Compliance The rate of interest to be charged on any loan shall not exceed 7.5% above the highest rate of interest offered on deposits by Nidhi and shall be calculated on reducing balance method. Dividend: A Nidhi shall not declare dividend exceeding 25% or Such higher amount as may be specifically approved by the Regional Director for reasons to be recorded in wri?ng and further subject to the following condi?ons- An equal amount is transferred to General Reserve; There has been no default in repayment of matured deposits and interest; and It has completed with all the rules as applicable to Nidhis. Director: The director shall be a MEMBER of Nidhi. He shall hold office for a term up to 10 consecu?ve years on the Board. He shall be eligible for re-appointment only a?er the expira?on of 2 years ceasing to be a director. Where the tenure of any director in any case had already been extended by the Central Government it shall terminate on expiry of such extended tenure. The person to be appointed as a Director shall comply with the requirements of Sec?on 152(4) of the Act and shall not have been disqualified as provided in Sec?on 164 of the Act. Auditor: The tenure of Auditor is five consecu?ve years. No auditor or audit firm as auditor shall be appointed for more than two terms of five consecu?ve years. The auditor shall be eligible for subsequent appointment a?er the expira?on of two years from the comple?on of his term. The Auditor of the company shall furnish a Cer?ficate every year to the effect that the company has complied with all the provision contained in the rules and such cer?ficates shall be annexed to the audit report and in case of non-compliance he shall specifically state the rules which have not been complied with. Branches: A Nidhi may open branches only if it has earned net profits a?er tax con?nuously during the preceding three financial years. The company may open up to 3 branches only within the district. If it proposes to open more than 3 branches within the district or any branch outside the district, it shall obtain prior permission of the Regional Director and in?ma?on is to be given to the Registrar about opening of every branch within 30 days of such opening. No Nidhi shall open branches or collec?on centers or offices or deposit centers, or by whatever name called outside the State where its registered office is situated. Further branches or collec?on centers or offices or deposit centers shall be opened unless financial statement and annual return are filed with the Registrar. 15 www.Venture-Care.com/Magazine October 2017

  16. Legal & Compliance Closure of Branch: A Nidhi shall not close any branch unless: It publishes an adver?sement in a newspaper in vernacular language in the place where it carries on business at least 30 days prior to such closure. Informing the public about such closure; fixes a copy of such adver?sement or a no?ce informing such closure of the branch on the no?ce board of Nidhi for a period of at least 30 days from the date on which adver?sement was published and Gives in?ma?on to the Registrar within 30 days of such closure. COMPLAINCE WITH REGISTRAR OF COMPANIES - RETURNS: NDH -1 Within 90 days from the closure of the first financial year a?er its incorpora?on and where applicable, the second financial year, Nidhi shall file a return of statutory compliances in Form NDH – 1 along with such fee as prescribed with the Registrar duly cer?fied by a Company Secretary in prac?ce or a Chartered Accountant in prac?ce or a Cost Accountant in prac?ce. NDH -2 If the company is not complying with the above it shall within90 days from the close of the first financial year, apply to the Regional Director in Form NDH -2 along with fee for extension of ?me and the Regional Director may consider the applica?on and pass orders within 30 days of the receipt of the applica?on. NDH -3 The Nidhi Company shall filed Form NDH-3 within thirty days from the conclusion of each half year duly cer?fied by a company secretary in prac?ce or chartered accountant in prac?ce or cost accountant in prac?ce. If there is failure the Nidhi shall not accept any further deposits from the commencement of the second financial year ?ll it complies with the provisions besides being liable for penal consequences provided in the Act. PENALTY: If a company contravenes any of the provisions of the rules the company and every officer of the company who is in default shall be punishable with fine which may extend to Rs.5,000/- and where the contraven?on is a con?nuing one, with a further fine which may extend to Rs.500/- for every day a?er the first during which the contraven?on con?nues. 16 www.Venture-Care.com/Magazine October 2017

  17. Comprehensive Business Care Helping your business to stay compliant. Single package to make your company GET SET GOING Why Choose our Comprehensive Business Care Why Choose our Comprehensive Business Care Venture-Care brings to you Specialized Business Care providing complete accounting, audit, taxation, registrations and annual compliance services. These packages are much more affordable compared to the cost of individual services and the best part is that they provide you peace of mind while running a business. You don't have to worry about “what to do when”. A team of expert CA and CS lead by our senior associate will always be available to handle your assignment, collect documents, punch your accounting entries, contact you for every compliance, generate reports for decision making and assist you in every matter. COMPREHENSIVE SERVICES VALUE ADDED SERVICES REAL TIME ASSISTANCE AFFORDABLE PRICING PROFESSIONAL APPROACH ACCURACY let us help your organization stay compliant and avoid heavy penalties, let us help your organization stay compliant and avoid heavy penalties, Talk with our Expert call : 020 65363633 Talk with our Expert call : 020 65363633 www.venture-care.com/comprehensive-business-care

  18. Strategy Strategies: Root of business “Strategies are roots of any business, plans are stems and branches and growth is fruit”. There are many areas where strategies can be implemented: Product strategies Marke?ng strategies Growth strategies Financial strategies R&D strategies Service strategies HR strategies and many more 1. Framework For Opera?onal planning Strategies provide the framework for plans by channelling opera?ng decisions and o?en pre-deciding them. If strategies are developed carefully and understood properly by managers, they provide more consistent framework for opera?onal planning. If this consistency exists and applied, there would be deployment of organiza?onal resources in those areas where they find be?er use. Strategies define the business area both in terms of customers and geographical areas served. Be?er the defini?on of these areas, be?er will be the deployment of resources. For example, if an organiza?on has set that it will introduce new products in the market, it will allocate more resources to research and development ac?vi?es, which is reflected in budget prepara?on. 18 www.Venture-Care.com/Magazine October 2017

  19. Strategy 2. Clarity in Direc?on of Ac?vi?es Strategies focus on direc?on of ac?vi?es by specifying what ac?vi?es are to be undertaken for achieving organiza?onal objec?ves. They make the organiza?onal objec?ves more clear and specific. For example, a business organiza?on may define its objec?ve as profit earning or a non-business organiza?on may define its objec?ve as social objec?ve. But these defini?ons are too broad and even vague for pu?ng them into opera?on. They are be?er spelled by strategies, which focus on opera?onal objec?ves and make them more prac?cal. For example, strategies will provide how profit objec?ve can be sharply defined in terms of how much profits is to be earned and what resources Of how much profit is to be earned and what resources will be required for that. When objec?ves are spelled out in these terms, they provide clear direc?on to per-sons in the organiza?on responsible for implemen?ng various courses of ac?on. Most people perform be?er if they know clearly what they are expected to do and where their organiza?on is going. 3. Increase Organiza?onal Effec?veness Strategies ensure organiza?onal effec?veness in several ways. The concept of effec?veness is that the organiza?on is able to achieve its objec?ves within the given resources. Thus, for effec?veness, it is not only necessary that resources are put to the best of their efficiency but also that they are put in a way which ensures their maximum contribu?on to organiza?onal objec?ves. In fact, taking strategic management, which states the objec?ve of the organiza?on in the context of given resources, can do this. Therefore, each resource of the organiza?on has a specific use at a par?cular ?me. Thus, strategies ensure that resources are put in ac?on in a way in which these have been specified. If this is done, organiza?on will achieve effec?veness. 4. Personnel Sa?sfac?on Strategies contribute towards organiza?on effec?veness by providing sa?sfac?on to the personnel of the organiza?on. In organiza?on where formal strategic management process is followed, people are more sa?sfied by definite prescrip?on of their roles thereby reducing role conflict and role ambiguity. If the decisions are systema?zed in the organiza?on, everyone knows how to proceed, how to contribute towards organiza?onal objec?ves, where the informa?on may be available, who can make decisions, and so on. Such clarity will bring effec?veness at the individual level and consequently at organiza?onal level. Strategies provide all these things in the organiza?on through which everything is made crystal clear. To conclude,“Without a strategy the organiza?on is like a ship without a rudder, going around in circles. It is like a tramp; it has no place to go.” They ascribe most business failures to lack of strategy, or the wrong strategy, or lack of implementa?on of a reasonably good strategy. They conclude from their study that without appropriate strategy effec?vely implemented, failure is a ma?er of ?me. 19 www.Venture-Care.com/Magazine October 2017

  20. Strategy 9 Tested Ways to Grow a Business Let your business grow on new trajectory. Here are some ways that will flourish your business. 1. Get your business spread in the exis?ng market Ge?ng new customers is not bad. But be?er will be to sell more to the exis?ng customers; retain the exis?ng customers. Acquisi?on of new customers will involve higher promo?on out-go. Whereas, selling to exis?ng customers will be cost-effec?ve. Pricing is another aspect which will help your business in penetra?ng the exis?ng market. Remember that always charging compe??ve price may not help. Some?mes you need to reduce the weight/quan?ty of the product (indirect pricing) or offer free gi?s. You may even change the packaging. 2. You may seek referrals. During or a?er every job or sale, ask your sa?sfied customers if he knows anyone else who would be interested in your products or services. However, this is possible only if your deliverables can delight the customers. 20 www.Venture-Care.com/Magazine October 2017

  21. Strategy 3. Innovate or modify your product Every product or service has some life. It is always sugges?ble to go for product innova?on or modifica?on. This will help in adding new customers also. However, research & development wing should be strong enough to perform this. Just think of transforma?on of offline business into online business. 4. Extend your market reach. You may start locally but increase the market reach. Many businesses have gone this way and grew tremendously. There are many ways to get it- open stores in new loca?ons, go virtual, acquire other companies, make ?e-ups, use social media, use website etc. 5. Par?cipate in trade shows and arrange seminars Trade shows can be a great way to grow too. Because trade shows draw people who are already interested in the type of product or service you offer. They can powerfully improve your bo?om line. 6. Win the niche market Big market customers try to follow the customers of niche market. Once your product or service has got hold in niche market, it will be easy to extend the present big market. Think of branded apparels, use of home appliances, mobile handsets and many more. 7. Reduce the costs. Don't forget that reducing cost directly helps in increasing bo?om line and thus valua?on of business. It is not necessary to cut costs in all the areas. Few areas where it can be done are- reduce wastages, electricity cost admin costs and other indirect costs. 21 www.Venture-Care.com/Magazine October 2017

  22. Strategy 8. Diversify your products or services. Diversifica?on in products and services is interes?ng way to empower growth. Package the products. Simply think of a burger or pizza is available with sauce and chilli flakes and cold drinks. Or, a restaurant serves meal with pickle and 'papad' and 'chutney'. 9. Franchising. Franchising is good way to grow your business. It may not be possible to directly reach the customers to create brand of your product or services and go for franchising model. To conclude, there is no op?on to let your business grow. The above ways are not exhaus?ve but there are ways possible to achieve that depending upon the nature of product/services and business model. 22 www.Venture-Care.com/Magazine October 2017

  23. Start VC SmartStart VC Smart Make your “Business Dream” a “Reality” A single window for all the essentials to start a successful Business Strartup. / Business Model Development Company Registration Logo Designing Trademark Registration E-office Our wide spectrum of services ensures a comprehensive package to service all your need to start your business including Business Model designing, company registration, Logo Designing, Trademark Registration along with financial and legal services. let us help your organization stay compliant and avoid heavy penalties, Talk with our account manager call : 020 65363633 See More www.venture-care.com/smart-start

  24. Strategy Things to considered while drafting a business plan Ribbo: Mr. Tick I want some fund for my business. Tick : How much fund you need? Approximately INR 5 crores. I need it urgently. Ribbo : Then why don't you dra? a business plan for your business? Do you know purpose of a business Tick : plan? Of course. It has sole purpose of convincing the investors to bring money in my business. Ribbo : So I think you are very clear that how and where the fund will be u?lized. Tick : Not exactly. But once I get fund I will start u?lizing it. Ribbo : The above conversa?on discloses two things- purpose of business plan and Clarity required. So entrepreneurs must understand that the sole purpose of business plan not just raising fund but it should give complete clarity of the planning. Meaning, first let us be clear about the planning and then approach any investor for raising fund. Dra?ing a business plan on paper is like a tool which helps investors to understand the planning aspects. Investors are smart enough to read between the lines. Then do not invest just on the basis of business plan but the business and entrepreneur. Let us discuss that what are the things which should be considered while dra?ing an impressive and logical business plan. 24 www.Venture-Care.com/Magazine October 2017

  25. Strategy Title page: It includes the table of content and execu?ve summary. Purpose is that a?er looking at the contents, investors will come to know whether the business plan covers all the aspects. Before going into the details of business plan, investor goes through execu?ve summary to understand what the different plans are. Execu?ve summary should not be very lengthy but to the point and impressive. The organiza?on: Business must have legal structure. If presently, it does not have any legal structure then which structure has been planned for and why. The business plan must men?on clearly that what kind of legal structure is suitable for the business. Under this heading it should also be men?oned about the team required or employed to execute. Whether the present team strength is sufficient or need to be increased. The Industry: It should have an overview of industry such as present status, segmenta?on, scope of growth etc. The business plan should clearly men?on that which industry segment will be targeted and why. SWOT: Strengths and weaknesses in the business should be genuinely men?oned. SWOT gives an insight of the strengths and weaknesses to the entrepreneur also. Moreover it leaves a very good impression in the mind of investor. Further, “how weaknesses shall be converted into strengths or at least can be removed” should also be men?oned to make the investor clear. What the opportuni?es and threats to the business? How it will be overcome? Can the business com- bine strengths and opportuni?es? Product and services: Business plan should complete details of the product which will be marketed. Is this a mass-reach product or niche product? “How the product is unique from the similar product? Why the purpose of the product? How it fulfils the very need of the customers? All these ques?ons should be answered. It may happen that product is associated with some services to the customers. What kinds of services are being given to the customers? Does the proposed service add value to the customers? Whether the product just fulfils customers' expecta?ons or it provides customer delight. All these should be men?oned clearly in the plan. 25 www.Venture-Care.com/Magazine October 2017

  26. Strategy Marke?ng the product: The planning document should men?on that how the product is ge?ng marketed presently. Further, it should also men?on that what are the short term and long term marke?ng plans. Importantly, the business plan should also men?on that how the planned marke?ng will be effec?ve to achieve the purpose. Moreover, the plan should also discuss the marke?ng tool to be used. It may happen that marke?ng of the product will be needed in stepwise; those steps should also be clearly explained. Opera?on and delivery: Business plan should clarify that how the opera?onal ac?vi?es will be carried out. How the product shall be delivered to the customers? Does the planned delivery model add value to the customers' expecta?ons? Finance: Perhaps this is the most cri?cal aspect of the business plan. This column should men?on that: How much fund is needed? At which stage a par?cular amount is needed? Where the fund shall be u?lized? How much fund shall be u?lized for a par?cular purpose? If possible a projected profit & Loss account and balance sheet should be men?oned to have outlook a?er the fund is infused. The planning document should have ready plan to give suitable exit op?on to the fund providers. To conclude, the business plan should men?on, with clarity, all the planning aspects. Also the entrepreneur should, by own heart, should be clear about the dra?ed plans. 26 www.Venture-Care.com/Magazine October 2017

  27. Strategy Momentum = Mass X Velocity It is not just a formula in physics. It has great business sense! Every business wants to grow and therefore businesses need to know where they exist; which will increase the growth momentum. Meaning of “Mass”, here, is “how much big the business is”. “Velocity” defines the aggressiveness with which business implements the growth plan/strategy. At least one of these two should be significant enough to reach commendable growth momentum. Of course, combina?on of both will be most desired. ITC in last AGM announced few facts: Gross revenue crossed INR 55,000 crore and PBT surpassed INR 15,000 crore. Non-cigare?e segments, compared to 1996, grew 18 ?mes sharing 58% of net segment revenue. Since 1996, Market Capitaliza?on has grown 72 ?mes and touched INR 4,00,000 Crore. ITC is big enough to create wealth for shareholders. Velocity is less. In the past it has undertaken some sustainable strategies such as launch of e-choupalfor connec?ng farmers to markets and helping in real price discovery. Another example of less mass but high velocity is “Patanjali”. The velocity with which it started manufacturing and adver?sing the different products under same brand name. Today patanjali brand is known everywhere and preferred too. There are many other examples which created wealth in a very short span of ?me; Amazon.com, Flipkart, Snapdeal, Paytm, Ola, Uber to name a few. These were very small ini?ally but suddenly acquired velocity to achieve huge growth momentum. 27 www.Venture-Care.com/Magazine October 2017

  28. Strategy How does huge momentum help? It works two ways. It removes bo?lenecks internal to the organiza?on- The present execu?on team will become more aggressive, if earlier was not. Also, middle level managers will gain confidence in execu?ng further plans/strategies. Secondly, momentum will help externally also in the sense that it will help in acquiring more market share. Ways to gain momentum Operate locally for reasonably longer ?me period and make hold on local market. Create and make aware brand for the product to the target customers. Innovate the product & brand recall frequently. If required, make alliances. Acquire local companies or brands which seem to be compe?tors. Adopt aggressive marke?ng strategies. Adopt aggressive pricing. Add innova?ve and value added services to the product. Step into global market What for whom Gaining momentum by acquiring high velocity seems to be good for start-ups and SMBs (Small & Medium Businesses). Start-ups should gain it in the form of stairs. These companies should develop a plan very fast and execute. Moreover, they need to be much more innova?ve and aggressive. Benefit of this will be that it will help in acquiring market share very fast. Risk a?ached is that if plan fails the promoters may be demoralized. Bigger companies should acquire momentum by implemen?ng plans slowly and con?nuously in long term. Even new plan fails, it will not affect the present product-service por?olio much. To conclude,acquiring momentum is needed. Which business should acquire momentum in what way is to be decided prudently. 28 www.Venture-Care.com/Magazine October 2017

  29. Strategy Road Map to dra? a Business plan Execu?ve summary It is a very important sec?on while dra?ing a clear business plan. Execu?ve summary reveals that how the company is planning for its future growth and whether this is different from others'. Apart from discussing about organiza?onal plan, product/service plan, marke?ng plan, survival and growth plan and financial plan it should also answer some cri?cal ques?ons such as:- Why this business will be successful? What is the risk appe?te level of the business owner? What is the level of fund required to successfully launch the business and how much will be promoters' fund? What is the short-term and long term goal of the business? Business Descrip?on This includes the core related areas surrounding the business and product/services. Some of the key ques?ons could be: What is the core area of business chosen? What is the product or service which will be sold? What is the growth poten?al? What is the business life? 29 www.Venture-Care.com/Magazine October 2017

  30. Strategy Organiza?onal descrip?on This is all about the organiza?onal structure and unique factors which compe?tors do not have. Whether there is plan to have pvt ltd or LLP or any other structure for the business. Has the business idea been conceived by a single person or more people are involved. Whether there is single decision authority etc. in nut shell, the following ques?ons may be important to be considered: What is the legal status of the company and future plan? How many are key decision makers? How many managers are required (opera?onal segment-wise) How many technical personnel are required? How many sales personnel are required? What is the plan to increase the number of personnel in next 12 months? Product and services What is marketed are actually products and services. This sec?on should comprehensively include even the small aspects related to products/services. “What is the USP of the product and how it serves the exact need of the customers” should be very clearly men?oned. If services are a?ached with the product then focus should be highligh?ng the add-on benefits which customers will derive. Every product has life. The sec?on must men?on the approximate product life. Also, how the company will plan with the new or modified product with extended or with at least earlier similar benefits. Few ques?ons which draw a?en?ons are: Is it standard product or customized one? If it is standard product and any customer wishes to add some more features then is it possible? Whether IP has been taken on the product? How product maturity shall be tackled? What will be the R&D cost and maintenance to the business? Industry Industry dynamics always change. Business plan must include the probable changes and the way to overcome those changes. Key success factors should be iden?fied and should be men?oned that how the company will go forward. The complete industry should be categorized into segments and sub-segments and accordingly the customers should be iden?fied. This sec?on must include also: Who are the targeted customers? What is the size of the targeted customers? Who are the compe?tors? (in numbers) What is the expected market share for this product/service? Marke?ng Many business plans usually say that what marke?ng channel shall be used to market products/ services. But a sound and explanatory business plan should clearly express that HOW MARKETING WILL BE DONE, WHICH CHANNEL SHOULD BE ADOPTED AND THE EXPECTED TANGIBLE BENEFITS WHICH THE COMPANY WILL DERIVE FROM IN TERMS OF GROWTH OF CUSTOMERS. 30 www.Venture-Care.com/Magazine October 2017

  31. Strategy This sec?on should answer the following also: Why the customers will need it? How the poten?al customers can be reached? Can the customers manage their business opera?ons without this new product/service? Does the price (cost to the customers) of the product/service jus?fy the benefits? Threats No business can avoid threats. It should be men?oned that how the possible threats should be handled. Answering the following ques?ons may be beneficial: What could be the poten?al threats? How frequently it can come? What will be the level of impact of threat on the business? How the company will overcome it? Financials Financial plan is one of the crucial aspects because ul?mate objec?ve is to raise finance and use it for various purposes. How much finance is needed at which place should be men?oned. The following should be included: What will be the promoters' contribu?on? For what purpose the promoters' money shall be used? What will be the exit op?on to the investors? To conclude, every business plan is unique in its case. So it should be dra?ed with utmost care. Moreover it should include all the planning aspects and should be self-explanatory. Loopholes, if any, should be highlighted and also the way to remove those loopholes. This will make the business plan more genuine and presentable. 31 www.Venture-Care.com/Magazine October 2017

  32. Finance Financial Modelling- A prac?cal view Few analysts understand that financial modelling nothing but workings on excel spread sheet. Par?ally true! Financial modelling is of building a model which represents real world Financial situa?on. This is a mathema?cal model. It is designed to represent the expected performance of a business or project or business por?olio. Myth and truth a?ached with financial modeling It is only for accoun?ng purposes:- There are many accoun?ng so?ware available globally. These so?ware are just used to see the result. But financial modelling is developed for many purposes such as corporate finance, asset valua?on, project management etc. It is a standard product:- Many analysts believe that financial modelling is a standard product and can be used the same model everywhere. But this is not true. Even in the same organiza?on different financial modelling shall be used for different purposes such as valua?on, corporate finance, es?ma?ng risk return a?ached with por?olio etc. It is very easy to develop:- Since the model is a representa?on of real world situa?on, anything expected to happen in the real world has to be incorporated in the model to know the impact on the profitability and wealth. Therefore assessment and forecas?ng of data input is very cri?cal. Moreover, all the variable inputs should be considered and level of impact needs to be assessed with proximity. Small business does not need financial modeling:- financial modeling can be used even for small businesses including start-ups. For start-ups it is helpful to build out a model to understand all the variables needed for success. The act of building out the model will bring different expenses, revenue ideas, and cash flow requirements to the surface. Same model can be used every ?me :- NO. as the ?me passes, business becomes bigger i.e. the internal variables are going to change. Also, external market dynamics will also shi?. Therefore, there is need to update the mathema?cal model. 32 www.Venture-Care.com/Magazine October 2017

  33. Finance How to develop financial model for your business? Step 1:- understand the business Clarity on business's aspects is very important. It is impera?ve to know the product's worth, industry aspects, change in dynamics of the industry, funds as and when required and impact of any kind of change on business. Step 2:- iden?fy the variables:- It is not possible to iden?fy all the variables at a ?me. But list out the variables as many as possible is required. Also it is the best idea to find out the most cri?cal variable. For start-ups it is bit difficult but business understanding can help in that. Step 3:- Assessment of impact of those variables:- A?er iden?fying the variables, impact of those variables should be assessed. Impact may be upside or downside. Step 4:- Give quan?ta?ve figure to those impact:- This is one of the most difficult task to convert qualita?ve aspects to convert into quan?ta?ve figure. But it is required because financial modeling is a mathema?cal model. For already running businesses, it is bit easier because previous impact is known but for start-ups it is difficult. The way out is to keep tenta?ve figures and as soon as any change in variable is no?ced quan?ta?ve figures should be incorporated. Uses of financial modeling The most popular use of this mathema?cal model is for internal analysis for decision making. Be it market environment or internal situa?on, these are not sta?c. Financial model can be presented to the investors/fund providers to provide them to have fair view so that they can have good confidence to invest in the business. To conclude, business owners should appreciate the value derived from financial model. It will help in growth of the business and will keep minimum risk with maximum return. Let us not considered developing a model waste of ?me and use it properly. Start-up should even be more proac?ve in developing it to grow faster. 33 www.Venture-Care.com/Magazine October 2017

  34. About Venture Care:- Venture Care is India's 1st of its kind online Business Solution Company which helps to Plan, Launch, Manage and Grow Businesses. Find More about us at www.venture-care.com WHAT WE DO Since 2010, Venture Care (a S&F Advisory Brand) is helping businesses and enterprises to Plan a Business, start a business, run a business, Grow a Business and Close or Exit from a Business. We at Venture Care generate ideas, spark actions and quantify time-bound results by providing tailored, practical and affordable solutions for the growth of your company. Venture-Care is dedicated to turning good ideas into measurable change Our team of Chartered Accountants, Business planner, Technocrats, Strategist, Marketers, Senior Bankers, Company Secretaries, Tax Experts and other professionals enables us to help and guide you to flourish your business aspirations. Branch office (Netherlands) Venture Care JonkerFransstraat 46, 3031 AV Rotterdam, (NL) Phone: +31 614 575 275 Head Office (India) Venture Care 17 Ajinkytara, Kalaniketan Society s.no. 29, Kalanagar Near Rajrshi Shahu & Janta Bank. Dhankawadi Pune 43. ask@venture-care.com 020 65363633 www.Venture-Care.com/Magazine

More Related